Bitcoin is sometimes labeled as a store of value or investment, but its original goal was to serve as a peer-to-peer digital currency. As with any other digital currency, it's important to know just how long it takes to transfer Bitcoin before you start using it. Some say it takes minutes, others say it takes hours or days, but how long does a Bitcoin transaction really take? In this article, we'll give you the real answer with a quick look at how blockchain technology works.
To fully understand Bitcoin transaction times, you need to know the basics of how Bitcoin transactions themselves work. Like most other cryptocurrencies, the Bitcoin network uses a blockchain to document every transaction, recording the size, origin, and destination of the transaction. Every Bitcoin user keeps a copy of the blockchain, and it's important to make sure all those copies match up.
When you send a transaction, Bitcoin miners can decide whether to include your transaction in the next section, or block, of the blockchain. Their decision will depend on the fee you chose for the transaction (higher fees means greater profits for the miner), and whether the transaction makes sense from a technical standpoint, such as whether you have enough funds to cover the transaction. However, the size of your transaction doesn't affect how quickly it will be added to the blockchain.
Confirmation is when a transaction is included in a newly mined block, which means that the transaction is now stored on the blockchain. Most of the time, this means the transaction is final since the blockchain stays the same. However, there's a small possibility that Bitcoin miners will find a conflicting block and decide to use that instead, thereby reversing the transaction.
The likelihood of a block changing (and a transaction being reversed) quickly decreases with every new block that is added after it, which is why subsequent blocks are also referred to as confirmations. The more confirmations, the less likely the transaction will be reversed and the more "complete" it is.
Confirmations reduce the risk of a transaction being reversed, so the more confirmations the better. Theoretically, though, there is always the chance that a transaction will be reversed no matter how old the block is. In practice, the probability of a transaction being reversed reduces so quickly that it becomes impossible.
This table shows the probability that a single user with some fraction of the network's computing power will succeed at changing a transaction after some number of confirmations:
As you can see, it becomes near impossible to change past transactions after a few confirmations, even if you were able to gain temporary control of a large fraction of the entire network's computing power (which can be extremely costly).
If you are sending a Bitcoin transaction, the receiving party will often decide how many confirmations are needed before they are confident the transaction is final. For most cryptocurrency exchanges, one confirmation is enough, which means it takes roughly ten minutes to transfer Bitcoin to an exchange.
If you are on the receiving end of a transaction, the number of confirmations you choose to wait for will depend on your risk tolerance. Since exchanges usually handle small volumes of coins over a greater number of transactions, they are satisfied with just one confirmation. However, if you were to receive a huge sum of money using the Bitcoin network, you might wait longer just to be sure the transaction takes place.
For most personal transactions, we recommend waiting for six confirmations, which means it takes roughly one hour to transfer any amount of Bitcoin. This is a standard that has been adopted by many Bitcoin wallets, which label transactions as "unconfirmed" until then.
During times of high network usage, it might take longer than ten minutes for your transactions to be confirmed. This is because miners choose pending transactions with the highest fees first, leaving other transactions for later.
If you want to guarantee that your transaction will be confirmed as soon as possible, you can increase the fee for your transaction very easily on most Bitcoin wallets. They will often suggest fees for you, depending on network demand and your level of urgency.
While increasing fees is the only way to increase the speed of Bitcoin transactions themselves, you can also speed up your total transaction time by sending directly from a Bitcoin wallet you control. If you send Bitcoin from an exchange - which interacts with the Bitcoin network itself - you'll have to wait for the exchange to register your transaction before they send it. Depending on the exchange, this added weight can range anywhere from seconds to days.
Not all cryptocurrencies are made the same, so transaction times may vary greatly between Bitcoin and other altcoins. Ultimately, the transaction principles of other blockchain-based coins are very similar, but with slight tweaks in the numbers.
For example, new blocks are created on the Litecoin network roughly every two and a half minutes. This means that Litecoin transactions only take two and a half minutes on exchanges that only need one confirmation, but they might take longer if you're receiving coins and want to wait for more confirmations.
Interestingly, Bitcoin Cash - which is often described as a more currency-oriented version of Bitcoin - also takes about ten minutes per block added, so transactions aren't necessarily quicker. Instead, Bitcoin Cash allows more transactions to be squeezed into every block, which makes transactions with smaller fees much faster, especially at times of high network usage.